Are regional integration arrangements
“Building blocks, or stumbling blocks”
VAISHALI SHARMA
Multilateral trade liberalization:
- Within GATT/WTO, each member country makes tariff
concessions on a quid pro quo basis (reciprocity)
- Any concession made to one member is automatically
extended to all other members (non-discrimination)
- It works politically
Regional/bilateral trade agreements:
- Trade liberalization on a discriminatory basis, i.e.,
concessions only made between parties to agreement
- Free trade areas (NAFTA) or customs unions (EU)
- In conflict with principle of non-discrimination in GATT/WTO
Article 1, but allowed under Article 24 if tariffs are reduced for
“substantially all trade” between parties
Regionalism, by allowing Multilateralism, we had better
stronger internalization of the work out what it means and, if
gains from trade liberalization, it means different things to
seems likely to facilitate freer different people, make sure to
trade when it is initially highly
restricted. identify the sense in which we
are using the term.
Sector-specific lobbies are a
danger if regionalism is
permitted because they tend
to stop blocs from moving all
the way to global free trade. In
the presence of lobbies, trade
diversion is good politics even
if it is bad economics.
Association of Southeast Asian Nations
Established on 8 August 1967 in Bangkok five original
Member Countries
Indonesia
Malaysia
Philippines
Singapore
Thailand
Brunei, Cambodia, Laos, Myanmar, and Vietnam (NEW
MEMBERS)
Objective
Accelerate economic growth, social progress and cultural
development in the region.
Promote regional peace and stability through abiding respect
for justice and the rule of law in the relationship among
countries in the region.
Adoption of the agreement on the ASEAN Free Trade Area
(AFTA) in 1992
Outward looking, Living in peace, Stability and prosperity,
Bonded together in partnership in dynamic development
Food, agriculture and forestry.
Three Pillars of ASEAN
ASEAN Security Community
Countries in the region live at peace with one another and
with the world in a just, democratic and harmonious
environment.
ASEAN Economic Community
Create a stable, prosperous and highly competitive
ASEAN economic region in which there is a free flow of
goods, services, investment and a freer flow of capital,
equitable economic development and reduced poverty
and socio-economic disparities in year 2020.
ASEAN Socio-Cultural Community
Foster cooperation in social development aimed at raising
the standard of living of disadvantaged groups and the
rural population
European Union
EU
The European Union (EU) is an economic and political
union of 27 member states, located primarily in Europe.
Single currency is in use between the 16 members of the
Eurozone.
The EU generated an estimated nominal GDP of
US$16.83 trillion in 2007 (amounting to 31% of the world's
total economic output)
MEMBER COUNTRIES
Austria Latvia
Belgium Lithuania
Bulgaria Luxembourg
Cyprus Malta
Czech Republic Denmark Netherlands
Estonia Poland
Finland Portugal
France Romania
Germany Slovakia
Greece Slovenia
Hungary Spain
Ireland Sweden
Italy United Kingdom of Great
Britain
Northern Ireland
Principal Objects of the EU
Establish European Citizenship
Ensure freedom, security, and justice
Promote economic and social progress
Assert Europe’s role in the world
The EU is run by five institutions, each
playing a specific role:
European Parliament
elected by the peoples of the Member States
Council of the Union
composed of the governments of the Member States
European Commission
driving force and executive body
Court of Justice
compliance with the law
Court of Auditors
sound and lawful management of the EU budget
North American Free Trade Agreement
(NAFTA)
NAFTA
Signed by the three Governments on 17 December 1992
• Implemented on January 1, 1994.
• Trade-liberalization agreement among members viz.
• United States, Canada, and Mexico
• Progressively eliminates most tariff and non-tariff barriers to trade
between these countries
• Facilitates cross-border investment,
• Cooperation regarding the environment and labor.
NAFTA
Structured as three bilateral agreements,
One between Canada and the United States,
Second between Mexico and the United States,
Third between Canada and Mexico.
Benefits of NAFTA
Dismantling trade barriers = market integration
Canada is # 1 U.S. export market
Mexico is # 2 U.S. export market
U.S. is #1 export market for both Canada and
Mexico
NAFTA pros/cons
Jobs created
Most under developed Benefits Mexico more then
countries gain the most the U.S
Tariffs reduced
Goods and services at U.S deficit with trading
lower rates partners
Mexico has opened its
financial sector to Loss of low wage
companies from US and American jobs to Mexico
Canada removed all
restrictions by 2007
Environmental problems
Mexico economy growing
again
South Asian Association for Regional
Cooperation
Bangladesh, Bhutan, India, Maldives Nepal, Pakistan,
Sri Lanka
South Asian Association for Regional
Cooperation
Formally came into existence in 1985 with the adoption of its
Charter at the first Summit in Dhaka (7- 8 December 1985).
Seven South Asian countries of Bangladesh, Bhutan, India,
the Maldives, Nepal, Pakistan and Sri Lanka
Strengthen their competitive position
Areas of Cooperation
Agriculture
Rural development
Telecommunications
Health and population services
Identify other areas of possible cooperation
MEMBER COUNTRIES
India
Nepal
Pakistan
Bangladesh
Bhutan
Maldives
Nepal.
Objective
Acceleration of economic growth,
Social progress and cultural development in the region,
Promotion of active collaboration and mutual assistance in
the economic, social, cultural, technical and scientific fields
and
Strengthening of cooperation among the Member States in
international forum on matters of common interest
The SAARC Secretariat
Established in Kathmandu on 16 January 1987.
Coordinate and monitor the implementation of SAARC
activities, service the meetings of the Association and serve
as the channel of communication between SAARC and other
international organizations
Comprises the Secretary General, seven Directors and the
General Services Staff.
Agriculture and Rural Development Division
Environment and Science and Technology Division
Economic, Trade and Finance Division
Social Affairs Division
Information and Publications Division
Energy, Tourism Division
Human Resource Development, Transport and Treaty
Division
SAPTA (South Asian Preferential Trade Arrangement)
In December 1991, the Sixth Summit held in Colombo member
countries agreed to formulate an agreement to establish a SAARC
Preferential Arrangement (SAPTA) by 1997.
Agreement on SAPTA was signed on 11 April 1993 and entered into
force on 7 December 1995
Deals with Tariffs, Non-Tariff Measures and Direct Trade Measures
PREFENTIAL TARIFF BASIS
Country Products Depth of concessions
Bangladesh 572 10% -15%
Bhutan 266 10-20%
India 2402 10-100%
Maldives 390 5-15%
Nepal 425 10-15%
Pakistan 685 10-30%
Sri Lanka 211` 10-75%
TOTAL 4951
SAFTA
SAFTA came into effect on 1 January 2006, with the aim of
reducing tariffs for intraregional trade among the seven
SAARC members. Pakistan and India are to complete
implementation by 2012, Sri Lanka by 2013 and Bangladesh,
Bhutan, Maldives and Nepal by 2015.
It replaces the earlier South Asia Preferential Trade
Agreement (SAPTA) and may eventually lead to a full-
fledged South Asia Economic Union.